Home » A total of 1.8 billion transactions were questioned and the annual reports of CIFI and CIFI Yongsheng were delayed- Economic Observation Network-Professional Financial News Website

A total of 1.8 billion transactions were questioned and the annual reports of CIFI and CIFI Yongsheng were delayed- Economic Observation Network-Professional Financial News Website

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Economic Observer Network reporter Ding Wenting March 31, 2023 is the deadline for the disclosure of the annual report of Hong Kong stocks. CIFI Holdings Group Co., Ltd. (hereinafter referred to as “CIFI Holdings”), which originally planned to announce the 2022 performance report on the same day, has not released the performance report for a long time, and the shares of CIFI Holdings have been suspended since 9:00 am on the same day. Trading of all structured products related to the company is also suspended at the same time.

Until late at night, an announcement issued by CIFI Holdings answered the market’s doubts about the suspension and annual report.

According to the announcement, the company’s auditors received an anonymous letter that raised some doubts about certain transactions between CIFI and its non-wholly owned subsidiary CIFI Yongsheng Services Co., Ltd., claiming that the total amount of these transactions was RMB 18 billion.

The management of CIFI has reviewed the transactions mentioned in the letter and believes that these transactions have been reflected in the group’s management accounts, and that these transactions are supported by sufficient commercial substance and business rationale, and comply with general commercial terms.

CIFI Yongsheng Service Group Co., Ltd. (hereinafter referred to as “CIFI Yongsheng”) also suspended trading at 9:00 am on March 31, and announced that in view of certain “unforeseen delays” in the preparation of financial information, CIFI The auditors of Hui Yongsheng Services are still reviewing the 2022 annual results, and the 2022 annual results cannot be published on or before March 31, 2023 in accordance with the listing rules.

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CIFI Yongsheng also mentioned in the announcement on the evening of the same day that the auditor of the company received an anonymous letter containing multiple opinions on certain transactions between CIFI Yongsheng and CIFI Holdings, one of the controlling shareholders. Alleged, the total amount is RMB 1.8 billion.

According to public information, the auditors hired by CIFI Holdings and CIFI Yongsheng are all from Deloitte.

Both companies said they worked closely with auditors to resolve their concerns about the transaction. The auditor suggested that, to address the content of the letter, the company and the audit committee should adopt additional procedures to verify and confirm the commercial substance and commercial rationale of the transaction, as well as compliance with relevant laws and regulations, so that the auditor can complete the necessary audit procedures. Trading in the company’s shares will also continue to be suspended on the Hong Kong Stock Exchange.

According to the relevant listing rules of the Hong Kong Stock Exchange, if the issuer fails to regularly publish financial information in accordance with the listing rules, the Hong Kong Stock Exchange will usually require the issuer to suspend trading in its securities, and the suspension will continue until the issuer publishes the necessary financial information and announcement of other materials that constitute inside information of the Company. CIFI Holdings and CIFI Yongsheng both stated that they currently plan to complete the delivery of the 2022 annual report on or before April 30, 2023.

In order to speed up the process of debt restructuring and improve liquidity, CIFI Holdings had previously put CIFI Yongsheng on the “shelf”. On December 12, 2022, CIFI Holdings Group announced that it plans to sell 23.26% of the shares of CIFI Yongsheng Service.

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However, a person close to CIFI told Economic Observer.com that some transactions with a total amount of 1.8 billion yuan mentioned in the anonymous letter have nothing to do with the above-mentioned equity transfer.

On March 10 this year, CIFI also announced its overseas debt restructuring plan. According to the announcement, CIFI’s “preliminary indicative key terms” for overseas debt restructuring include cash payments that do not reduce the principal amount, creditors voluntarily choose to convert shares, and reduce interest , The debt extension shall not exceed 7 years, pay a certain amount of upfront payment, formulate a feasible additional credit enhancement plan, etc. CIFI Holdings said, “The company has started discussions with the Coordination Committee on a potential comprehensive solution, and is expected to start discussions with the bondholder group as soon as possible and no later than March 31.”

CIFI said in an announcement on the evening of March 31 that it has made significant progress in seeking a comprehensive solution to the current overseas liquidity situation, but the final determination and implementation of the plan will be limited by many factors.

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